The last hour sell-off is likely to see the Nifty retesting its earlier support of 5,330 on Wednesday and a possible rebound thereafter. The intraday trading volume in the Nifty July futures indicate buy-side trades and an increase of 154,550 shares in open interest (OI), suggesting short-covering from bears and a long build-up from bulls operators. The market is expected to be strong in the next month series as the Nifty August futures closed at a premium and saw an increase of 10 per cent in OI, mostly through buy-side trades.
According to time-price opportunity (TPO) data, or most preferred area for price traders, a sharp rebound can be expected in the Nifty around 5,441. However, technically, the Nifty has strong resistance around 5,420 and support around 5,360. On Tuesday, the Nifty maintained the support and closed at 5,368 from the intraday low of 5,350. Options traders expect the 50-share index to get strong support at 5,300 and even move up above 5,400 in the near future. No wonder, the 5,400-strike call added 461,550 shares in OI through buy-side trades.
IndusInd Bank Head (Global Markets Group) Moses Harding said the markets were moving within the strong support at 17,850/5,345 and resistance at 18,050/5,420. This performance is considered good in the light of weak global cues and with the ever-present risk of reverse flows of “hot money” from the stock markets.
For now, foreign institutional investors continue to be in “buy mode” driven by zero interest growth in the western economies for extended periods of time, while domestic institutional investors are in sell mode to generate cash for their shift into high-yield, short-term fixed income bonds.
Larsen & Toubro (L&T) achieved on Tuesday the TPO target of Rs 1,919 and closed on a weak note. The July futures of L&T are expected to move down to Rs 1,871 from the close of Rs 1892.75, based on TPO projections in the last one hour of trade.
However, price projections using intraday TPOs and volume indicate L&T is likely to face a strong resistance at Rs 1,923-1,927. Among others, DLF gained 1.2 per cent on short covering. TPO data indicates resistance for DLF at around Rs 326.
